This entry was posted on Friday, July 20th, 2007 at 2:50 pm and is filed under Mortgage Programs, Qualifying. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Family Opportunity Mortgage program
Through the years, I have helped many parents purchase homes or condo’s for college bound children. Because of the high demand for housing around college campuses, this has often proven to be a great investment.
Last year, my son lived in an 8 bedroom house near San Diego State University where he attended school and played soccer. Rent was $700 per bedroom! Do the math. That’s $5600 per month in rent! How’s that for positive cash flow while you wait for values to rise. I’ve seen appreciation cover the entire cost of the education.
Until now, however, parents have had to accept higher interest rates. That’s because very few kids have the job history or established credit needed to be an occupant borrower. Even when parents co-borrow, we’ve had to contend with stand-along (debt) ratios.
Now with the new Family Opportunity Mortgage, it’s easy. Parents can buy a home for a college bound child, disabled child, or even an elderly parent who lacks sufficient income of their own. And they can get the best available owner occupied rates! Single family homes, condo’s and PUDs are all fine, and you can even do 2–1 buydowns. Nice.
Got a question or comment? Leave it below and I’ll get it answered for you.
August 12th, 2007 at 8:18 am
Are you kidding? I’ve been doing these kinds of deals for my clients for years. You just call it a 2nd home, have the parents buy it, and move the kids in. What the big deal?
August 12th, 2007 at 8:34 am
James,
The big deal is that you are committing “occupancy fraud” when you do it this way. That is one of the forms of mortgage fraud, and it exposes you, your clients, and your broker to potential liability.
Increasingly, lenders are sending someone out to the home after the loan closes to see who’s actually living in it. It better be the person you indicated on the loan application, or that loan may be called due.
Why not just do it right in the first place?